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Catastrophe models involve a vast amount of data that help clients, insurers and reinsurers understand risks associated with property-catastrophe coverage and a range of other lines, according to experts at Aon Benfield. Having reliable, thorough data is crucial because clients need to "understand the value of what they risk transfer, their strategy for risk transfer, and how you price it," said John Moore of Aon Benfield Analytics.

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Economic losses resulting from catastrophes in October likely will exceed $10 billion, Aon Benfield says. At least $2 billion of losses are expected to result from flooding in South Carolina, with Hurricane Patricia and typhoons in Asia also among the costliest disasters, Aon Benfield says.

Technology has made the reinsurance industry able to weather major natural-catastrophe losses in the past decade, with the traditional alternating cycle of hard and soft markets disappearing, said Mike Van Slooten of Aon Benfield.

Relatively low worldwide catastrophe losses were a major contributor to reinsurance-capital levels that totaled $525 billion at the conclusion of the third quarter, according to an Aon Benfield report. "New competitive capital flows will continue to benefit reinsurance buyers in the April, June and July renewal seasons," the report said. In addition, the issuance of catastrophe bonds reached $7.4 billion overall last year, according to Aon Benfield.

Risk management related to solar and geomagnetic activity deserves increased attention as the threat posed by solar weather is expected to approach a peak this year, according to Aon Benfield. Such "pear-shaped phenomena" operate in cycles that can be researched and better understood to better tailor insurance and reinsurance for such events, an Aon Benfield report says.

The catastrophe-bond transactions that closed during the fourth quarter were worth a total of $2 billion, amounting to 43% of bond activity last year, according to a report from Aon Benfield. "Strong investor demand for diversifying risk was witnessed in the fourth quarter of 2011, which facilitated a total upsizing of $800 million across the insurance-linked securities transactions brought to market," said Paul Schultz, president of Aon Benfield Securities.